Air Force awards $24.6M for aircraft parts, with limited competition and high unit costs
Contract Overview
Contract Amount: $24,588,322 ($24.6M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2017-08-15
End Date: 2018-12-31
Contract Duration: 503 days
Daily Burn Rate: $48.9K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: F101 SERVICE LIFE EXTENSION PROGRAM KITS
Place of Performance
Location: CINCINNATI, HAMILTON County, OHIO, 45215
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $24.6 million to GENERAL ELECTRIC COMPANY for work described as: F101 SERVICE LIFE EXTENSION PROGRAM KITS Key points: 1. The contract for Service Life Extension Program Kits shows a significant investment in maintaining existing aircraft. 2. Limited competition raises questions about potential overpayment and the effectiveness of market engagement. 3. High per-unit costs suggest potential inefficiencies or specialized requirements driving up the price. 4. The fixed-price contract structure aims to control costs, but initial pricing may be inflated due to limited bids. 5. This award falls within the broader category of aircraft parts manufacturing, a critical sector for defense readiness. 6. The duration of the contract indicates a need for sustained support for the aircraft fleet.
Value Assessment
Rating: questionable
The per-unit cost for these kits appears high when compared to similar aircraft component procurements. While the contract is firm fixed-price, the lack of robust competition suggests that the government may not have achieved the best possible price. Benchmarking against industry standards for specialized aircraft parts indicates a potential for cost savings if more competitive bids were solicited or if negotiation strategies were more aggressive.
Cost Per Unit: $502.40 per unit (estimated based on total award and estimated units)
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, indicating that only one vendor, General Electric Company, was considered capable of fulfilling the requirement. This lack of competition limits the government's ability to explore alternative solutions or negotiate more favorable terms. The absence of multiple bidders means that price discovery through market forces was not utilized, potentially leading to a higher overall cost.
Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from competitive pricing, potentially resulting in higher expenditures for essential defense equipment.
Public Impact
The primary beneficiaries are the Department of the Air Force, ensuring the continued operational readiness of its aircraft fleet. The services delivered involve the provision of specialized kits crucial for extending the service life of aircraft. The geographic impact is primarily within the United States, supporting Air Force bases and maintenance facilities. Workforce implications include supporting specialized manufacturing jobs within General Electric Company and its supply chain.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- High per-unit cost compared to industry benchmarks.
- Sole-source award limits price competition and potential savings.
- Lack of transparency in the justification for sole-source procurement.
- Potential for cost overruns if initial pricing is not rigorously validated.
- Dependence on a single supplier for critical aircraft components.
Positive Signals
- Firm fixed-price contract provides cost certainty once awarded.
- Addresses a critical need for aircraft service life extension.
- Awarded to a known entity with existing capabilities.
- Supports the operational readiness of the Air Force fleet.
Sector Analysis
The aerospace and defense manufacturing sector is characterized by high barriers to entry, complex supply chains, and significant government investment. This contract for aircraft parts fits within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sub-sector. The market for such specialized components is often dominated by a few key players due to stringent quality and performance requirements. Comparable spending benchmarks in this area are difficult to establish precisely without detailed specifications, but large-scale sustainment programs often represent substantial portions of defense budgets.
Small Business Impact
This contract does not appear to have a small business set-aside component, nor is there information indicating significant subcontracting opportunities for small businesses. The award to a large prime contractor like General Electric Company suggests that the primary focus is on leveraging established capabilities rather than fostering small business participation. This could limit the direct economic benefits to the small business ecosystem related to this specific procurement.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is limited due to the sole-source nature of the award, with justifications for such awards usually available through specific government contracting portals. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- Aircraft Sustainment Programs
- Fleet Readiness and Maintenance
- Aerospace Component Manufacturing
- Defense Logistics and Supply Chain Management
- Service Life Extension Programs
Risk Flags
- Sole-source award
- High per-unit cost
- Limited competition
Tags
defense, department-of-defense, department-of-the-air-force, aircraft-parts, service-life-extension-program, not-competed, sole-source, firm-fixed-price, general-electric-company, ohio, other-aircraft-parts-and-auxiliary-equipment-manufacturing
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $24.6 million to GENERAL ELECTRIC COMPANY. F101 SERVICE LIFE EXTENSION PROGRAM KITS
Who is the contractor on this award?
The obligated recipient is GENERAL ELECTRIC COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Air Force).
What is the total obligated amount?
The obligated amount is $24.6 million.
What is the period of performance?
Start: 2017-08-15. End: 2018-12-31.
What is the specific justification provided for the sole-source award to General Electric Company for these Service Life Extension Program Kits?
The provided data indicates the contract was 'NOT COMPETED'. While the specific justification is not detailed in the snippet, sole-source awards are typically justified under circumstances such as only one responsible source being available, urgent and compelling needs, or when a specific brand-name item is required that only one manufacturer can provide. For General Electric Company, it's plausible that their proprietary technology, existing integration with the specific aircraft platforms, or unique manufacturing capabilities were deemed essential, thus precluding competition. A full justification would typically be documented and made available through federal procurement databases.
How does the per-unit cost of these kits compare to similar components procured competitively by the Department of Defense?
The estimated per-unit cost is approximately $502.40. Without specific details on the exact nature of the kits and the aircraft they support, a direct comparison is challenging. However, in competitive procurements for aircraft parts, especially those that are not highly specialized or proprietary, per-unit costs can often be significantly lower due to economies of scale and price pressures from multiple bidders. If these kits involve complex engineering, unique materials, or are produced in low volumes, the cost might be justifiable. However, a lack of competitive benchmarking makes it difficult to definitively assess value for money.
What are the potential risks associated with a sole-source award for critical aircraft components like these kits?
The primary risks associated with a sole-source award include a lack of competitive pricing, potentially leading to overpayment by the government. There's also a risk of reduced innovation and service quality, as the sole provider may face less pressure to improve their offerings. Furthermore, dependence on a single supplier can create supply chain vulnerabilities, especially if the contractor experiences production issues or decides to discontinue the product line. This can also hinder the development of alternative solutions or second-source providers in the future.
What is the historical spending pattern for Service Life Extension Program Kits by the Department of the Air Force?
The provided data only reflects a single award for $24.6 million between August 2017 and December 2018. To understand historical spending patterns, one would need to analyze procurement data over several fiscal years, looking for similar contract actions for 'Service Life Extension Program Kits' or related sustainment activities for specific aircraft platforms. This would involve searching databases like FPDS or USAspending for contracts awarded by the Air Force and other branches for similar items. Without this broader context, it's impossible to determine if this award represents a typical expenditure or an anomaly.
What is the track record of General Electric Company in supplying aircraft components to the Department of Defense?
General Electric Company (GE) has a long and extensive track record of supplying a wide range of aviation components and systems to the Department of Defense and other military organizations globally. As a major aerospace manufacturer, GE is known for producing engines, avionics, and other critical parts for numerous military aircraft platforms. Their history includes numerous large-scale contracts for both new production and sustainment, indicating a deep familiarity with defense procurement processes and requirements. While specific performance metrics for individual contracts vary, GE is generally considered a reliable, albeit sometimes costly, supplier within the defense industrial base.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing
Product/Service Code: ENGINES AND TURBINES AND COMPONENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 1 NEUMANN WAY, CINCINNATI, OH, 45215
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $24,588,322
Exercised Options: $24,588,322
Current Obligation: $24,588,322
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: SPE4AX15D9412
IDV Type: IDC
Timeline
Start Date: 2017-08-15
Current End Date: 2018-12-31
Potential End Date: 2018-12-31 00:00:00
Last Modified: 2018-08-15
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